Law & Ethics Essay

Custom Student Mr. Teacher ENG 1001-04 17 November 2016

Law & Ethics

BB General Partnership

Dracca is able to seek recover from Silva Gray individually on the judgment for BB partnership because the partnership has not been incorporated. In a general partnership each individual can be sued for the full amount of the business debt. The partners cannot have personal interest within the partnership (Bagley & Savage, 2009 p. 729). If one partner incurs all of the debt, they can then sue the other partners for their parts of the debt. Within a Limited Liability Partnership these three items would differ from the general partnership. 1. Limited partners do not play an active role in the business

2. Limited partners are not personally liable

3. Limited partners face slightly different tax rules (NOLO) BB is not a formalized company under the laws of corporation and taxation, so in turn each individual can be held liable for the debt legally. However, Dracca should not have gone after Ms. Grey solely on a tip of her wealth.

Business Judgment Rule

The Business Judgment Rule states that as long as the board members have acted in good faith and meet the basic standards, there should not be a fear of prosecution when making decisions (Bagley & Savage, 2009 p. 801). To insure that the board of directors did not fault their duty of care and the Business Judgment Rule several items must be analyzed.

1. “Were the directors interested in the transaction?2. Did the directors act in good faith? 3. Did the directors act in a manner that cannot be attributed to a rational purpose? 4. Did the directors reach the decision by a negligent process?” (Bagley & Savage, 2009 p.801). The board must also consider their duty of care and duty of loyalty. Duty of care requires people involved in the company to make informed and reasonable decisions for the business. Duty of loyalty requires employees to act in good faith and in good interest of the company (Bagley & Savage, 2009 p. 799).

In the case of Dracca vs. BB, the board did not act in good duty of care, duty of loyalty or use the Business Judgment Rule appropriately. The overall concept to obtain the debt from BB was an action of duty or care and loyalty to the company. However, the way the board of directors went about the retrieval of the debt was not the best method. By pursuing Ms. Gray off a ‘tip’ the fund backfired and the company incurred a lot of fees that might not of occurred if the pursue was planned correctly. The process of pursuing the money was neglected, fault number three in the Business Judgment rule.

Employment Discrimination

The accounting manager for Dracca overseeing the BB account, Martin Long had his pay and responsibilities decreased by Accounting Director Mary Smith. The Equal Employment Opportunity Commission (EEOC) was developed to help employees against discrimination of age, sex, race, gender, national origin, disability, and religion (Bagley & Savage, 2009 p.466). In Martin Long’s case he left the company because Ms. Smith’s visual and vocal opinions. The opinions turned into harassment and eventually Long left the Firm. By vocalizing and placing visual signs Ms. Smith was creating a harsh work environment for employees.

Long will be able to sue Dracca for employment discrimination and argue constructive discharge because there must be evidence of unpleasant working condition that it forces the employee to resign and the employer has not taken care of the complaint within 15 days of being informed of the issues. The harassment must be worse than Title VII (Runkel, n.d.). Dracca is responsible for Ms. Smith’s actions/discrimination against Long. Kate was fired after reporting to the EEOC the harassment from Ms. Smith. Kate should not of been fired for reporting the discrimination. Due to Dracca’s action upon firing Kate, the company seems to approve of Ms. Smith’s actions. The EEOC Compliance Manual states that the person filing the complaint is “protected against retaliation by a respondent for participating in the statutory complaint proceedings even if that complaint involved a different covered entity” (Igasaki, 1998).

From the EEOC, Dracca would be held liable for Hernandez’s actions within the court system. Hernandez violated the EEOC Title VII discriminatory actions. The Title VII makes two theories clear to businesses. 1. The theory of disparate treatment and 2. The theory of disparate impact. Disparate treatment means that the plaintiff has to prove that the employer intentionally discriminated against him/her denying a benefit of employment (Bagley & Savage, 2009 p.471). Disparate impact is when employers make employment decisions based on selection, making employers complete test and evaluations.

BFOQ stands for Bona Fide Occupational that an employer must prove that the type of person is not able to perform the job position. In this case, women with children were hired in order to sell the product. Dracca would have to prove that men were not able to perform the job. The BFOQ cannot be used as a defense when there is a preferred gender within the company. The following also apply. Usually BFOQ is not based on color and gender will not qualify when the 1. “Assumptions of the comparative employment characteristics of women in general, 2. Stereotyped characteristics of the sexes, and 3. The preferences of coworkers, employers or customers for one gender or the other (Bagley & Savage, 2009 p. 485).


After reviewing the case, I recommend the following

1. Dracca hire new board members with a focus on the business, and not a focus on money. The Board of Directors should be compiled of people that are business savvy and care about the firm and about the financials in a legal and ethical manner. By the Board leaning on a tip and not fact, the business incurred a lot of debt that could have been spent somewhere else within the firm. 2. Dracca should have a firmer hiring process where the prospects are asked to observe and manage for a day, or write out a list of goals, or how to hire people for certain positions. This could show some speculation to discrimination. Also, Dracca should be stricter on company policy regarding religion, politics, and harassment. If need be the company can have classes on what is and is not harassment within the workplace. In this case, it seems that Dracca turned a blind eye on Mr. Long.

Bagley, Savage (2009 Feb. 5). Managers and the Legal Environment: Strategies
for the 21st Century, Retrieved from: Igasaki, P., (1998), The U.S. Equal Employment Opportunity Commission, EEOC Directives Transmittal, Retrieved from: Runkel, R. (n.d.), Constructive Discharge #9, Law Memo: First in Employment Law. Retrieved from:

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  • Date: 17 November 2016

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